There's been a raft of rig-related news bites over the past few days, so let's dive right in and see what we can divine about the state of the drilling market, shall we?
A welterweight treads water
Rowan Companies
I still think Rowan's got great depth for a shallow-water driller, and its premium jackups have continued to secure somewhat attractive contracts with folks like Pemex. Rowan signed one recent two-year stint at a dayrate in the $150,000 range, which is some 20% lower than the Gorilla IV's prior engagement with W&T Offshore, and only around half of what ExxonMobil
In addition to this recent drilling deal, Rowan subsidiary LeTourneau Technologies has secured a $185 million order for two newbuild jackups. LeTourneau, if you didn't know, built the very first jackup back in the 1950s. Anyway, these two kits are to be assembled at one of Petrobras'
This deal is a welcome development for Rowan, which has gotten the rug pulled out from under it lately by order cancellations and suspensions by financially fragile counterparties.
From riches to rags
Here's another somewhat troubling data point in the ongoing drilling rig drama. Atwood Oceanics
You know that buyer's strike I talked about in the onshore market? I think that's exactly what's going on here. The bid/ask spread between E&Ps and oil service contractors is still wide, and the operators are now delaying further commitments until they can get better rates. I imagine there's a certain degree of payback involved here as well, given the deteriorating customer satisfaction ratings so well-documented by EnergyPoint Research throughout the capacity-constrained up-cycle.
Hercules' gar(b)age sale
Word got out Monday that Hercules Offshore is attempting to offload some of its least desirable drilling rigs with the assistance of broker Bassoe Offshore. Interestingly, Bassoe's venture capital arm made an investment in Hercules back in 2000, so it must be about as familiar with these assets as anyone.
The 16 rigs -- six jackups and 10 barge rigs -- are "old and tired," with only two seeing major refurbishments in the 1990s. Why anyone would step in and buy these assets from Hercules now, rather than wait for the potential to pick them up out of bankruptcy court somewhere down the road, is beyond me. Of course, it's possible Hercules will hang on and make it through to the next drilling bonanza mostly intact. The firm's debt load is just harrowing compared to the quality of the firm's assets, in my view.
A drilling damsel in distress
Speaking of debt, Norwegian Seadrill made an interesting move the other day, scooping up a chunk of the high-yield debt of fellow Norwegian drilling outfit Petromena. I've been wary of Seadrill's financial engineering, reminding me in many ways of billionaire John Fredriksen's other baby, Frontline